Forex Trading Strategies for Beginner
Finding strategies is a part of the forex learning process for beginners. As a beginner in forex trading, looking for a currency trading strategy that is suitable for beginners in forex is very necessary.
Because the growth of the forex investment business is increasingly difficult to do, learning forex trading strategies must also be harder.
High profits and high risk in forex trading can make you get rich quick, but it can also make you get bankrupt.
Like a trader in the market, competition between other traders needs a specific strategy to win the competition. The same thing happens in forex. If we use the wrong strategy, we might lose and lose all the capital in account trading.
Lots of beginners in the forex business have sprung up and many traders are falling.
Like the 1 death grows a thousand. Indeed the interest of beginners to start a forex business is decreasing.
Because many traders who fail make beginner traders become pessimistic to be successful in the forex investment business.
As a beginner, to be successful you have to prepare a trading strategy that is suitable for beginners in the forex market in order to earn profits or profits continuously.
Profit is indeed the dream of all traders and strategy is a way to gain profits.
Understanding of forex strategies for beginners
In the process of searching for forex trading strategies carried out by beginners, there needs to be an understanding that must be known.
That is the forex trading business, there is no holy grail system that will always get profit without loss.
Logically, this is very impossible.
There is no single trading strategy that will provide continuous profits without loss. Even as professional traders can lose in addition as beginner traders. Even if profits at first trades, it must be due to mere luck.
Effective strategies are not always suitable for beginners, but a simple, simple and easy to implement strategy is a powerful strategy for profit in the forex business.
The strategy is the first step to gain experience. And experience can be our own trading teacher. Many experiences will make our psychological as a trader better and more stable.
Trading strategies suitable for beginners in forex
If we talk about strategy, we can find thousands of diverse strategies. It’s hard to find a strategy for ourselves
Moreover, the type of trader is different. Some are compatible with this strategy and some are compatible with other strategies. Everything is diverse
Then what is the forex trading strategy for beginners who are suitable and profitable?
For beginners, you can try 5 simple but profitable strategies. But a small risk.
A suitable strategy is the swing market strategy, follow trends, forex scalping strategies, breakout strategies, and hedging trading strategies.
Here the following is an explanation of the trading strategies for the beginner.
Swing Trading strategy
Swing trading is an open position strategy when there is a long trend market.
This trading strategy usually uses moving averages, Bollinger band, Parabolic SAR, and Donchian.
This strategy is quite simple and easy to learn. But need patience in carrying out this strategy.
One method that is quite widely used is to utilize the help of support and resistance levels.
Both important levels can confirm the entry signal, where buy orders can be placed when the price downtrend touches the support level and confirmed to turn up.
Meanwhile, short positions can be opened when the uptrend reaches resistance and the downward reversal signal has been confirmed.
Crossing Moving Average
Moving Average (MA) is the most common trend indicator that is widely used by traders. from beginner and Professional Trader.
MA always used to identify the direction of the trend, basically, when the MA is below the price it confirms if the current price is in a bullish trend (uptrend).
Conversely, if the MA moves above the price, it means the current trend identified as bearish (downtrend)
When the MA crosses the price, the indicator line shifts position and indicates a change in trend direction.
Overbought and Oversold
Overbought is a condition where the price increase has reached the maximum area, so the price will then go down.
Conversely, oversold has dropped in the bottom area, so the next price will go up again.
Overbought and oversold prices are not seen in movements on the chart. You need indicator like as RSI, stochastic, CCI, etc.
Apart from being different in terms of view, each indicator has unequal overbought and oversold benchmarks.
RSI, for example, shows an overbought limit at level 70 and an oversold limit at 30. Stochastic has levels 80 and 20, while the CCI signals an overbought price if the chart indicator crosses the +100, and oversold when the price drops -100.
With an understanding of overbought and oversold that usually brings reversal opportunities, it not difficult for beginners to rely on both of these as a reliable forex trading technique.
Sideways is a condition of market movements where prices move stably and tend to be flat.
Movements like this often occur, but traders do not use them much because they are considered less potential.
However, if a trader learns forex trading techniques in the sideways market, profits will be easily obtained.
This strategy uses level-level support and resistance which are the lower and upper prices in the range.
Support and resistance can be determined from many things, starting from the manual method by looking at price patterns, psychological levels, Fibonacci tools, or Pivot Point methods.
The basic principle of this strategy that prices hit areas that have been tested, the price will bounce back.
When the price breaks through the tested area, it is likely a breakout, but if the area is still strong then this support and resistance becomes the entry point reference.
In contrast to the sideways strategy, this forex trading technique is effective when the market is trending. A trendline is basically a vertical line that acts as support (when prices rise) or resistance (when the price trend decreases).
A breakout occurs when prices suddenly break through the trendline and change direction. If the trendline line is tested strong, then this breakout signal can be the beginning of a reversal (price reversal).
On this chart, it is clear how the opportunity to open sell after the price of the crossing trendline turns to strengthen.
Strategy Rules 4 Weeks
This strategy was created and popularized by Richard Davoud Donchian an American commodity trader and forex trader of Armenian descent.
The rules to trade with this strategy are to wait for the price to pass the highest price in the last 4 weeks to take a Buy position and wait for the price to pass the lowest price for the past 4 weeks to take a Sell position.
The example above is the movement of the pair USD / CAD with Time Frame Weekly.
After that, specify a chart or candle 4 weeks back, then determine the resistance and support taken from the highest level or the lowest both shadow and candle body.
Then wait for the Weekly price to Breakout up or down.
How do you choose the most suitable trading strategy for beginners?
From the trading strategy for beginners described above, there is nothing right or wrong, which is beneficial or detrimental.
All techniques can bring results as long as they are used correctly. Therefore, choose the strategy that you understand the most and then test the compatibility in the demo account.
Learning forex is indeed difficult, but if study diligently can generate big profits.
Whatever your choice of forex trading strategy will be, don`t forget with 4 important things.
- Always pay attention to the fundamental news, price movements occurred because of a volume buyer and sellers and often news giving impact to currency
- Use the price action method to confirm the indicator signal.
- Always apply risk management to anticipate losses. No matter how much forex trading techniques you use, there is always a chance of loss. So you should anticipate these losses by minimizing loss through risk management rules.
- Try to discipline applying forex trading techniques or also commonly called Trading Trading Discipline, this is about psychology trading and very important during trades because so many beginners fail due they still weak of their psychology